International journal of the academy of Organizational behavior management
(IJAOBM)
IAOBM
Editor in Chief
Dr. Mohammad Ali Sarlak
Associate Editors
Ajay Jain, Aarhus University, Denmark
Alan Smith, Robert Morris University, United States
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Anna Maria Gil Lafuente, University of Barcelona, Spain
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Annie Yeadon-Lee, Huddersfield University Business School, UK
Anthony Libertella, Adelphi University, United States
Ching-Chiao Yang, National Kaohsiung Marine University, Taiwan
Chunhui Liu, University of Winnipeg, Canada
Constantin Bratianu, Academy of Economic Studies of Bucharest, Romania
Cyril Foropon, University of Manitoba, Canada
Dafnis Coudounaris, Neapolis University Pafos, Cyprus
Edgar Serna M., Corporación Universitaria Remington, Colombia
Eric Otenyo, Northern Arizona University, United States
Farley Nobre, Federal University of Parana, Brazil
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Fuyume Sai, Daito Bunka University, Japan
ilhami Yücel, Erzincan University, Turkey
Irina Purcarea, The Bucharest University of Economic Studies, Romania
Jaime Rivera-Camino, Universidad Carlos III de Madrid , Spain
Jan Kratzer, Technical University Berlin ,Germany
Jan Lies, Euro FH, Germany
João Ferreira, University of Beira Interior, Portugal
Jonathan Matusitz ,University of Central Florida, United States
Jose M. Merigo ,University of Barcelona, Spain
Laura Šeibokaitė, Vytautas Magnus University, Lithuania
LILIANA FARIA ,ISLA CAMPUS LISBOA - LAUREATE INTERNATIONAL UNIVERSITIES, Portugal
Luiz Sakuda , Centro Universitário da FEI, Brazil
Mahmud Akhter Shareef, McMaster University, Canada
Manish Kumar, IIM Kozhikode, India
Maria Rosita Cagnina, University of Udine, Italy
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Naresh Khatri, University of Missouri, USA
Patrizia Garengo, University of Padua, Italy
Popescu N. Gheorghe, Bucharest University, Romania
Ruppa Thulasiram, University of Manitoba, Canada
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Spyros Lioukas, Athens Univ. of Economics and Business, Greece
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Thierry Rakotobe-Joel , Ramapo College of New Jersey , United States
Tiina Brandt, University of Vaasa, Finland
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VÍCTOR JESÚS GARCÍA MORALES, UNIVERSITY OF GRANADA, Spain
Vitor Braga, Porto Polytechnic - School of Technology and Management of Felgueiras, Portugal
Xi Zhang, Chinese Academy of Sciences, China
Xianhai Meng, Queen's University Belfast, UK
Xinyuan Zhao, Sun Yat-Sen University, China
YANNIS MARKOVITS, National Centre of Public Administration and Local Government, Greece
Yen-Ku Kuo, Chinese Culture University, Taiwan
Editorial Review Board
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Angilberto Freitas, Unigranrio University, Brazil
Antonia Mercedes García-Cabrera, Universidad de Las Palmas de Gran Canaria, Spain
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CRISTINA ESTEVÃO, School of Management of Idanha-a-Nova, Portugal
CRISTINA Raluca POPESCU,University of Bucharest, Romania
Daniel Pittino, Italy
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David Rooney, The University of Queensland, Australia
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Dipti rekha Mohapatra, Ravenshaw University, India
Fei Hao, Huazhong University of Science and Technology, China
Fernanda Nogueira, Technical University of Lisbon, Portugal
Helga Rippen, Westat ,USA
Irena Jindrichovska, Prague University of Economics and Management, Czech Republic
Jamal Ouenniche, University of Edinburgh, UK
Jen-te YANG,National Kaohsiung University of Hospitality and Tourism ,Taiwan
Joseph Sungau, Mzumbe University, Tanzania
Júlio Abrantes, Polytechnic Institute of Castelo Branco, Portugal
Jürgen Donhauser, Comenius University Bratislava ,Germany
Justine Mbukwa, Mzumbe University, Tanzania
K. Övgü Çakmak-OtluoÄŸlu, Istanbul University, Turkey
Maria Nieves Perez Arostegui, University of Granada, Spain
María Teresa Bolívar-Ramos, University of Granada, Spain
Mayumi tabat, National Dong Hwa University, Japan
Olli-Pekka Viinamäki, University of Vaasa, Finland
Oluseyi Sode, University of Lagos, Nigeria
Pedro Ferreira, Lusiada University, Portugal
Pilar Piñeiro García, University of Vigo, Spain
Popescu Veronica Adriana, Satu-Mare and Bucharest Universities, Romania
Prasenjit Chatterjee, MCKV Institute of Engineering, India
Priscila Alfaro-Barrantes, Florida State University, United States
Ramanjeet Singh, India
Renata Borges, Universidade Federal de Minas Gerais, Brazil
Roberta Cuel, University of Trento, Italy
Rodrigo Martin-Rojas, Leon University, Spain
Rupsa Chatterjee, calcutta University, India
Ryh-song Yeh, Yuan Ze University, Taiwan
Sara Nunes, Polytechnic Institute of Castelo Branco, Portugal
Shrimatee Dowd-Koniecki, USA
Sonia M. Suárez-Ortega, University of Las Palmas de Gran Canaria, Spain
Timothy Kellison, The Florida State University, USA
Tracy Cooper, University of South Florida, USA
Viktoriia Potishuk, Technische Universität Berlin, Germany
Wen-Chung Shih, Asia University, Taiwan
Xiaogang Cun, Sun Yat-sen University, China
Yong Liu, Tianjin University, China
International journal of the academy of Organizational behavior management (IJAOBM)
IAOBM
Issue 5 (April-June 2013)
Table of Contents
1
ASSASSINATOR OF PERFORMANCE: AN OUTLINE OF PROCRASTINATION
FROM ORGANIZATIONAL BEHAVIOR VIEWPOINT
2
FOSTERING KNOWLEDGE SHARING BEHAVIOR: THE ROLE OF
ORGANIZATIONAL CULTURE AND TRUST
27
THE BEHAVIORAL EFFECTS OF TECHNOLOGY DIFFUSION FROM JAPAN
TO TAIWAN IN TFT-LCD INDUSTRY
MAYUMI TABATA, National Dong Hwa University, TAIWAN
58
AN EXPLORATION OF INDUSTRIAL FIRMS' BEHAVIOR
YONG LIU, Tianjin University, china
69
DIMENSIONS OF JOB STRESS AS CORRELATES OF WITHDRAWAL
INTENTION AMONG SURVIVORS OF MERGED AND ACQUIRED BANKS IN
NIGERIA
ANTHONY GBENRO BALOGUN, Adekunle Ajasin University, Nigeria
92
TO FORGIVE OR NOT TO FORGIVE: RELATIONSHIPS AMONG JUSTICE,
REVENGE, AVOIDANCE, BENEVOLENCE AND CITIZENSHIP BEHAVIOR
MONICA LAW, Hong Kong Shue Yan University , Hong Kong
This is one paper of
International journal of the academy of Organizational
behavior management (IJAOBM)
Issue 5 (April-June 2013)
International journal of the academy of
Organizational
behavior management
(IJAOBM)
Issue 5 (April-June 2013) (27 - 57)
The Behavioral Effects of Technology Diffusion from Japan to Taiwan in TFT-LCD Industry
MayumiTabata
National Dong Hwa University, No. 1, Sec. 2, Da Hsueh Rd., Shoufeng, Hualien 97401, Taiwan, R.O.C.
[email protected]
Abstract
Problem Statement: This article explores the process of knowledge flow from Japan to
Taiwan in the global TFT-LCD (Thin Film Transistor Liquid Crystal Display) industry and
examines the main behavioral effects in the global TFT-LCD market after the technology
diffusion from Japanese consumer electronics giants to Taiwanese TFT-LCD industry.
Methodology: I conducted depth interviews with executives in Japanese TFT-LCD
equipment manufacturers and Taiwanese counterparts, and performed comparative
analysis of the academic tradition and context of technology development in Japanese
high-tech industry and Taiwanese counterparts based on the major industry studies of
the two countries. Conclusions: In the cross-border competition and technological
knowledge diffusion process, Japanese companies are concerned about the strategies how to
maintain the advantages of core technology and avoid outflow of technology from Japan to
other Asian countries. As for Taiwanese companies, they are much more concerned about the
strategies how to catch-up Japanese counterparts and increase global market share
effectively through cross-national social and personal relationship. The present paper showed
the failure of Japanese “technology-centric” strategy and the rise of Taiwanese “social
embeddedness” advantage are the main factor of “the rise of Taiwan and the fall of Japan”
in the global TFT-LCD market after the technology diffusion from Japanese consumer
electronics giants to Taiwanese TFT-LCD industry.
Keywords:
TFT-LCD industry, technology diffusion ,technology-centric strategy, social embeddedness ,
comparative study of Taiwan and Japan, Behavioral Effects
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International journal of the academy of
Organizational
behavior management
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Issue 5 (April-June 2013) (27 - 57)
1. Introduction
Founded in 1976, Taiwan’s flat panel industry has been about 30 years of
development history. From the 1970s to the 1990s, Taiwanese manufacturers
introduced technology from the United States and produced low-end display such as
TN-LCD, STN-LCD. However, in 1997, they began to introduce mass production
technology of TFT-LCD from Japan and produced high-end flat panel. Since 2000,
Taiwan’s large-size TFT-LCD industry rushed into the consolidation period, AU
Optronics Corporation (Taiwanese top TFT-LCD manufacturer) and Chi Mei
(Taiwanese second largest TFT-LCD manufacturer) and two South Korean companies
competed fiercely in the TFT-LCD global market(Yan, 2010).During this period,
Japanese electronics giants dominated global TFT-LCD’s market share until the early
1990s, were defeated by South Korean and Taiwan's manufacturers, and forced out of
the large-size TFT-LCD manufacturing market.
From the global panel industry's long-term development, the history of Taiwan's
panel industry is accompanied by an opportunity for the progress of technology
generations in Japanese consumer electronics giants(technology diffusion from Japan
in every stage of technology generation through inter-firm social relations and
engineers’ cross-national personal network)and transfer of production bases in the
cross-national setting; in other words, this generation transition in technology
involves the flow of technological knowledge in the cross-border industrial process.
In the tradition of Taiwan's economic sociology and economic geography, the
previous studies from the “social embeddeness” or “social network” perspective
analyzed Taiwan's industrial development process. For example, in the study of IC
industry, TFT-LCD and other high-tech industries, they focused on the effectiveness
of technology community in industrial clusters, the cross-national mobility of
technical personnel and the diffusion of technological knowledge through the social
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Organizational
behavior management
(IJAOBM)
Issue 5 (April-June 2013) (27 - 57)
networks among engineers (Hsu,1999; Jou and Chen, 2000; Hsu and Saxenian, 2000;
Saxenian and Hsu, 2001; Chen, 2008; Tabata, 2012; Tabata, 2006). In other words,
social condition of industrial learning in Taiwanis the crucial explanatory factor that
the reason why Taiwanese manufacturers were able to play a key actors in global
TFT-LCD market.
The tradition of Japanese academia of economics and business management, from
“technology-centric” perspective analyzed how Japanese electronics giants lost their
market share in the global large-size TFT-LCD market and were defeated by the
catch-up of South Korean and Taiwanese manufacturers (Itami, 1995; Tani, 2003;
Nakata, 2007a; Nakata, 2007b; Tatsumoto, 2008; Akabane, 2008).They assume that
Japanese
manufacturing
equipment
makers
embedded
key
technology
of
manufacturing TFT-LCD into the manufacturing equipment, and sold them to a large
number of Taiwanese TFT-LCD manufacturers, this is a main reason of the key
technology’s outflow into Taiwanese TFT-LCD industry from Japan and the rapid
development of Taiwanese TFT-LCD industry.
Different perspective between Japanese academic society and Taiwanese
counterparts (either technology-centric or social embeddedness) appropriately reflects
the contrasting situation with that of Japanese large-size TFT-LCD industry and
Taiwanese counterparts. In other words, Japanese consumer electronics giants
emphasizing industrial technology capability became impossible to exert a
competitive edge in the global market, instead, Taiwanese TFT-LCD firms focusing
on inter-firm social relationships such as technology community in industrial clusters
and cross-national personal network started to grab global market share from Japanese
counterparts.For example, in the past, Sharp (Japanese top sales TFT-LCD
manufacturer) maintained the dominant force in the global TFT-LCD technological
competence. However, currently Sharp lost market shares to other Asian competitors
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Organizational
behavior management
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Issue 5 (April-June 2013) (27 - 57)
such as South Korea's Samsung, LG Display and Taiwanese TFT-LCD manufacturers.
In 2008, Japan's proportion of total world shipments in large-sized LCD reduced to
7.4%.Meanwhile, South Korea’s proportion of total world shipments increased to
43.5%, Taiwan’s proportion also increased to 44.1% (2008, STPI). Sharp’s stock
price fell sharply, and is now trapped in a serious financial crisis.
Around the year 2010, Sharp LCD TV named “Aquos” equipped with a TFTLCD manufactured by Sharp was sold in huge numbers. At that time, Sharp’s
Kameyama factory was the most famous production base of the LCD panel and LCD
TV in the world. However, in August 2012, Sharp announced the expected deficit last
fiscal year, and estimated that deficit will increase sharply to 250 billion yen(about 32
billion US dollars) in 2013.Especially, sales of LCD panels dropped more than 20
percent and an operating loss increased to 63.4 billion yen(about 800 million US
dollars) (Weekly Economist, 2012.9.11) .
As just described, although LCD panel industry in Japan has the advantage of
superior technology, however, in terms of global market share, they were completely
defeated by Taiwanese and Korean counterparts.
2. History and Concept
2.1 Historical Background of Technology-centric and Social
Embeddedness Perspective
In terms of business or industry research academic tradition, Taiwan and Japan
have experienced a different development process in their own way. In Japanese
academic society, whether it is a historical analysis of industry, business model
analysis, enterprise or industry research, they have been analyzed by economists
(modern economics or political economy) or business management scholars, and their
point of view has been focused on the“ technology-centric” perspective. However in
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International journal of the academy of
Organizational
behavior management
(IJAOBM)
Issue 5 (April-June 2013) (27 - 57)
Taiwan’s business or industry research area, sociologists have played a key role.
Sociologists in Taiwan have studied enterprises or industry for about more than
twenty years of history, since the 1980s, they have been influenced by development
sociology in Western academic tradition and the development of capitalism in East
Asia, and have begun to explore the development model of Taiwanese industry in the
global division of labor. Sociologists in Taiwan are also influenced significantly by
economic sociology in western sociological discipline. As Stark(2009) mentioned in
the phrase of Talcott Parsons, “You, economists, study value; we, the sociologists, will
study values. You will have claim on the economy; we will stake our claim on the
social relations in which economies are embedded (Stark, 2009:7)”, the target of
economic sociology is to analyze social embeddedness that rests on the inter-personal
relationships in our everyday life economic transactions.
From 1985 to 1995, “Society and Enterprise” study began to flourish in Taiwan,
Taiwanese economic sociologist focused on the varieties of economic activity
embedded in social and cultural aspects, and started to explore the family-oriented
and network structure of SMEs, large enterprises in Taiwan. After the 1990s,
returnees from the United States sociologist, for example, Rueyling Tzeng (1993) and
Yen-Fen Tseng (1997) and others from social capital, and trust network perspective
tried to explain the logic of business operations in Taiwan. Since 1996, Dung-sheng
Chen (1997; 2000) and Jinn-yuh Hsu (1998; 1999) have begun to explore high-tech
industry network and industrial clusters respectively. These economic sociologists and
economic geographers from “social embeddeness” perspective have analyzed global
industrial division of labor and technology innovation and learning network (Hsung,
2006).
In Japanese academic society, the study of business or industrial development
are conducted in department of economics and faculty of business management, their
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International journal of the academy of
Organizational
behavior management
(IJAOBM)
Issue 5 (April-June 2013) (27 - 57)
main concern is that“ technology-centric” perspective, the focus of their discussion
about industrial research is the process of the continuous improvement of advanced
technology1. Akamatsu (1950; 1962) "flying geese pattern theory" is a pioneer
concept of Japan's “technology-centric” perspective, it was extremely influenced by
static and linear logic of dependency theory. The main point of this theory is that in
advanced industrial countries, after cutting-edge technologies has matured, the
company will transfer this obsolete technology into the less advanced industrial
countries continuously.
Akamatsu’s pioneer concept of Japan's “technology-centric” not only brought
considerable influence on a following Japanese high-tech industry study (Itami, 1995;
Tani, 2003; Nakata, 2007a; Nakata, 2007b; Tatsumoto, 2008; Akabane, 2008), but
also had a crucial impact on the Japanese technology strategy and policy
(standardization or non-standardization of technology). For example, Fujimoto (2005),
pointed out, the advantage of Japanese technology is an implicit knowledge
constituted by the product architecture, which includes “integral architecture” and
“closed structure” .This product architecture is totally different from the standardized
product architecture of computer products. The product architecture of automobiles,
motorcycles, small appliances, and game software is “integral architecture ”and
“closed structure”, they need a sensitive and perfect coordination among every
component (integral architecture). The interface design among components is
applicable only to a single enterprise (closed structure).
I assume that whether Taiwan's “social embeddeness” or Japan's “technology-
1In
Japan, most sociologists are trained in the country, there are few PhD returned from overseas.
Therefore, they are not influenced by the tradition of western economic sociology. In an exceptional
case, just only one sociologist in Japan has introduced western economic sociology into Japanese
academic society. Prof. Shin Watanabe received his PhD from UCLA is teaching economic sociology
at Sophia University in Tokyo. He translated Mark Granovetter’s writings into Japanese (Watanabe,
2008).
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Organizational
behavior management
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Issue 5 (April-June 2013) (27 - 57)
centric” perspective, both of them have a blind spot in their argument. In this conflict
argument of “network versus technology” and “internal causal theory” that just
focuses on the competitive edge of technology or social network in their country’s
boarder, I cannot analyze the interaction process between advanced industrial
countries and peripheral countries in the cross-national industrial development of East
Asian economic region. In recent years, some sociologists in Taiwan try to apply the
logic of social embeddeness to the trans-border field of global market competition,
argue the interactive process that Taiwanese firms gained a competitive edge while
adjusting the cross-national collaboration relationship with Western brand companies.
I call this approach “global social embeddeness” perspective, representative
sociologists in this framework are Cheng, Lu-lin (2006) and Hsieh, Michelle Feiyu(2006). For example, Taiwan's bicycle industry through the cross-border production
networks enhanced its quality of product and service. Taiwanese manufacturers based
on the profound experience of domestic outsourcing business, learned the way of
operation including product design, production processes control and delivery time
across enterprise boundaries .This learning mechanism in the cross-national field such
as overseas factory production, logistics system, product design for foreign buyers,
promoted the flexibility of operation in Taiwan's SMEs, its open inter-firm network
and industrial cluster enhanced the global competitiveness of Taiwanese bicycle
industry (Hsieh, 2006). Cheng (1999) also analyzed the formation process of the
global operation model in Taiwanese shoe industry. In the late 1980s, because of the
elevated labor cost and land prices in Taiwan, foreign buyers started to adjust the
global procurement network, Taiwanese shoe manufactures established supply chain
network with foreign buyers in China, and developed the new global operation model.
Social analysis usually analyzes social phenomena from “national border” or
“ethnic nationalism” perspective. However, in the development of globalization since
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International journal of the academy of
Organizational
behavior management
(IJAOBM)
Issue 5 (April-June 2013) (27 - 57)
the late 20th century, it has been extremely difficult to develop an argument intended
for national borders or ethnic nationalism. In this sense, whether Taiwan’s “social
network” or Japan’s “technology-centric” perspective, both of them are focusing just
only on the internal sphere of domestic events, both are unquestionably the ethnic
nationalist framework.
As just described, from the domestic “internal causal theory” point of view, I
cannot explore the cross-national interaction process between foreign firms and
Taiwanese manufactures in this recent industrial development period of East Asian
region. In the subsequent analysis, from the “global social embeddeness” perspective
I try to revisit and reargue the cross-border development process in global TFT-LCD
industry, illustrate the situation reflecting the failure of Japanese technology-centric
perspective.
2.2
The Failure of Japanese Technology-centric Perspective
Japanese researcher Akabane (2008) from“ technology-centric” perspective
analyzed the impact of Japanese technology strategy which brought to the catch-up
strategy of Taiwanese firms in TFT-LCD industry. He pointed out that Japanese
major consumer-electronics giants (Sharp, NEC, Mitsubishi, Toshiba, Hitachi, Fujitsu
etc.) standardized manufacturing technology of TFT-LCD (technology open strategy),
Taiwanese companies became able to learn and master Japanese technology quickly.
However, Japanese companies unstandardized technology of TFT-LCD (technology
closed strategy), Taiwanese firms immediately did not become able to master
Japanese technology, and speed of catch-up slowed down.
From the first generation (the period of setting up factory: 1990) of TFT-LCD
technology to the third generation (the period of setting up factory: 1995), Taiwanese
companies’ technology level of commercial production had been lagged about four
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International journal of the academy of
Organizational
behavior management
(IJAOBM)
Issue 5 (April-June 2013) (27 - 57)
years behind Japanese counterparts (see Table1).According to the analysis of
Akabane, since 2001, the Japanese electronics manufacturers have standardized
manufacturing technology in order to reduce costs, and have embedded core
technology and know-how in the manufacturing facility of LCD panel. Taiwanese
companies bought a large amount of manufacturing equipment from Japan, learned
and mastered Japanese core manufacturing technology of TFT-LCD through
manufacturing facility, speeded up their catch-up on Japanese counterparts .Nakata
(2007b)also pointed out that from 2002 to 2004, Taiwanese TFT-LCD manufacturers
purchased a large amount of Japanese manufacturing facilities embedded in the fifth
generation (the period of setting up factory: 2002), and made Taiwanese
manufacturers easier to adopt the core technology of Japanese core manufacturing
technology. However, Akabane assumed that since the sixth generation (the period of
setting up factory:2004) of TFT-LCD technology, Sharp (the world's leading
company of TFT-LCD technology) and other Japanese manufactures had adopted
“black-box (unstandardized technology) strategy”, Taiwanese firms’ promotion of
technology would have lagged far behind Japanese counterparts.
Opposed to Akabane and Nakata’s analyses, I recognized that their assumptions
are different from the time-shifted process of Taiwanese TFT-LCD industry’s
development. According to Akabane, Japanese consumer-electronics giants
standardize production technology of TFT-LCD, Taiwanese firms become able to
learn and master it quickly. Instead, Japanese firms don’t standardize manufacturing
technology, Taiwanese companies totally cannot catch up on Japanese counterparts.
However, this point is different from the actual situation of Taiwanese TFT-LCD
industry. For example, since the fifth-generation TFT-LCD manufacturing
technology (the period of setting up factory: 2002), Japanese manufactures have
embedded standardized production technology and know-how in manufacturing
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Issue 5 (April-June 2013) (27 - 57)
facility, however, Taiwanese manufactures already caught up with Japanese
technology in the time of the fourth generation (the period of setting up factory:
2001).At this period, technology of Taiwanese TFT-LCD industry just only lagged
one year behind Japanese counterparts (See Table 1).
Sharp has adopted “black-box (unstandardized technology) strategy” since the
sixth-generation (the period of setting up factory: 2004), however, as seen in Figure 1
and Table 1, AUO(the largest TFT-LCD manufacturer in Taiwan)established the
sixth-generation plant in 2004, the speed of catch-up did not delay behind Japanese
manufacturers .Since the seventh generation (the period of setting up factory: 2007),
due to the recession and funding pressures, Sharp did not set up seventh-generation
plant. In contrast, from 2006 through 2008, AUO set up the seventh generation ,the
7.5 generation and the eight generations steadily, which was not affected by Japanese
black-box strategy. Economists and management scholars in Japanese academic
society and Japanese corporate executives believe strongly that, Japanese consumer
electronics giants are concentrated in developing cutting edge technologies and just
have to prevent technology spillover, it is easy to maintain the largest market share in
the world. However, present market situation in global TFT-LCD industry is totally
different from Japanese technology-centric perspective. As can be seen in the
following analysis, Taiwanese firms through social embeddedness, such as personal
network including Taiwanese engineers returned from the United States and Japanese
engineers and consultant she ad hunted from Japanese firms, learned TFT-LCD key
technology promptly. Furthermore, Taiwanese firms through engineer’s community in
Taiwan industrial clusters made the technology introduced from Japan spread and
diffuse throughout the TFT-LCD industry in Taiwan in a short period of time.
As just described, Taiwanese firm’s “global social embeddedness” has a high
level of competitiveness. Taiwanese TFT-LCD manufacturers have the advantage
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International journal of the academy of
Organizational
behavior management
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Issue 5 (April-June 2013) (27 - 57)
being able to introduce appropriate technology to respond the timing of changing
global market quickly. In contrast to Taiwanese firms, Japanese manufacturers place
much value on technology development excessively (technology-centric) in their
management structure. As is shown Figure 1, Japanese consumer electronics giants
devote an enormous amount of money in R&D(research and development), their
R&D as percentage of sales is 4% or more of it. However, it was not reflected in the
sales growth (Figure 2)(Seki, 2012: 203-218).In contrast, the amount of money
invested by Taiwanese TFT-LCD manufacturers in R&D as percentage of sales is
under 3%, however, their sales growth are extremely stable.
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8
as % of sales
7
Sharp,Japan
6
Chunghwa Picture Tubes,Taiwan
5
Fujitsu,Japan
4
Sanyo Electric,Japan
3
Mitsubishi Electric,Japan
2
Chi Mei Optoelectronic,Taiwan
1
AU Optronics,Taiwan
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
0
years
Figure 1. R&D investment as % of sales
Source: Based on Department for Business Innovation & Skills, The 2000-2010 R&D
Scoreboard.
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Growth over average of last 4 years (%)
250
Organizational
behavior management
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Chi Mei Optoelectronic,Taiwan
200
AU Optronics,Taiwan
150
Sharp,Japan
100
Mitsubishi Electric,Japan
50
Fujitsu,Japan
Sanyo Electric,Japan
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
-50
-100
Chunghwa Picture
Tubes,Taiwan
years
Figure 2. Sales Growth over average of last 4 years (%)
Source: Based on Department for Business Innovation & Skills, The 2000-2010 R&D
Scoreboard.
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3. Findings from Field Research
3.1
The Main Reason of the Failure of Japanese Technology
Blockade Policy
In this chapter, I explore the main reason of the failure of technology blockade
policy (black-box strategy)that Akabane pointed out and the new cross-national
interrelationships between Taiwanese TFT-LCD manufacturers and Japanese
manufacturing equipment makers through interviews with executives in Japanese
TFT-LCD equipment manufacturers and Taiwanese counterparts.
In the early 1990s and 1997, Japanese TFT-LCD industry enjoyed a golden age
.At that time, Japanese leading consumer-electronics giants had in-house divisions of
TFT-LCD manufacturing business. However, IT bubble burst in 2000, the following
year, Japanese consumer-electronics giants suffered a huge deficit. Japanese firms
tried to overcome the pressure of funding with partnership between Taiwanese firms
and Japanese counterparts, however, due to the Korean firms’ fast-paced catch-up and
serious recession, liquidated in-house TFT-LCD manufacturing division, and spun off
them into separate companies. TFT-LCD business spun off from main office
downsized their operations, and they were forced to focus on the R&D and
manufacture of small-size TFT- LCD. Japanese engineers specialized in
manufacturing large size TFT-LCD lost their jobs in Japan, and they were headhunted
by Korean and Taiwanese firms, this brain drain of Japanese senior engineers has
continued until 2002 (Tabata,2012).Taiwanese TFT-LCD manufacturer expressed
their “global social embeddeness” strategy on the background of Japanese consumerelectronics giants’ recession-ridden damage. That is, introducing a large number of
engineers from Japan through personal network, Taiwanese TFT-LCD manufacturers
learned and mastered Japanese key technology.
In addition, Taiwan's LCD industry has started since the late 1970s, Taiwanese
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engineers returned from the United States passed on the experimental manufacturing
technology of LCD in Taiwan. Japanese consumer-electronics giants refused
transferring mass production technology to Taiwanese manufactures, Taiwanese
manufacturers on the basis of experimental technology introduced from the United
States, through trial and error, accumulated their experience and know-how. As a
result, the rise of Korean firms and long-term depression in Japan gave a big
breakthrough for a take-off of Taiwanese TFT-LCD industry.
In 1998, Japanese consumer-electronics giants suffered from Korean firms’
fast-paced catch-up, started to transfer mass production technology to Taiwanese
manufacturers. The purpose of this technology transfer was outsourcing production
process to Taiwanese manufacturers for the cost-cutting .At this time, Japanese
consumer-electronics giants were weakened in power relationships with Taiwanese
companies, inequality relationships between Japanese consumer electronics giants and
Taiwanese TFT-LCD manufacturers changed significantly. From 1997 to 2000,
Taiwan’s major TFT-LCD manufactures such as CPT, Unipac, Acer Display
Technology, Hann star successfully introduced key technology from Japanese
companies. In the early 2000, Taiwanese TFT-LCD manufacturers through the
accumulation of experience and know-how, introduction of Japanese senior engineers,
technology transfer from Japanese companies, they had already learned and mastered
key technology of TFT-LCD. Japanese researchers such as Akabane overlooked this
point. Under the influence of internal factors in Taiwan(accumulation of experience
and knowhow, social embeddedness), technology blockade policy(black-box strategy)
adopted by Japanese companies since 2004 was minimally effective. Several senior
engineers in Japanese TFT-LCD manufacturing equipment makers also commented
with one accord, “If Taiwanese TFT-LCD manufacturers buy manufacturing
equipments from Japanese makers, there is no guarantee to be able to learn and master
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manufacturing technology. This is because it is very important for TFT-LCD
manufacturing to establish original design concept (recipe) of each manufacturer.
Most Japanese manufacturing equipment makers are not able to provide specific
guidance on this recipe to Taiwanese clients”(MF-J1, MF-J3, MF-J4, MF-J6)2.
Business manager who are responsible for Taiwanese market in Tokyo Electron
(the world's second largest Japanese semiconductor and TFT-LCD production
equipment manufacturer) commented that:
Each TFT-LCD manufacture’s control recipe of etching equipment is different.
For example, add a little something in a few seconds when gas injected into the film
and so on, these are the secret of each TFT-LCD manufacturer, we do not tell the
customers(Taiwanese TFT-LCD manufacturers) specifically. Though the timing of
gas injection was informed by us these methods are mainly directed by customers
themselves, so, just because Taiwanese TFT-LCD manufacturers bought etching
equipment from Japanese TFT-LCD manufacturing equipment makers, it doesn’t
mean that non-professional person or inexpert are able to control etching equipment
immediately. Certainly, in terms of the details of machine control including the
starting up of the equipment, customers will be informed to some extent by us. But, we
do not instruct customers specifically, “the film should be cut to here” or something.
We only sell the hardware, and each hardware was adjusted based on the demand of
customer, we confirm each customer’s requirements of the way of cutting film before
shipment. More details of the part, of course, their design are planned by customers.
In terms of gas injection time and angle, we possibly check up with customers(MF-J1).
2Each
quotation from an interviewee in this paper was given a code to mark the source of information.
The first letter of the code refers to the main product grouping of the company interviewee belongs to.
The following letters stand for the country of the interviewee. The Arabic numbers refers to the serial
number of interviewee.
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According to business manager in Tokyo Electron, when Taiwanese
manufacturers don’t have established their process of manufacture, even if they buy
manufacturing equipment from Japanese firms, it is impossible for them to control
equipment
appropriately.YAC
company’s
(major
acid
etching
equipment
manufacturers in Japan) cadre also pointed out that if there is no comprehensive
understanding about TFT-LCD design and process conditions influencing the quality
of TFT-LCD, even if Taiwanese TFT-LCD manufacturers buy manufacturing
equipment from Japanese makers, they cannot necessarily manufacture TFT-LCD
appropriately. This means that only because Taiwanese TFT-LCD manufacturers have
the ability of coordination and adjustment (tuning) of Japanese technology, they are
able to produce high-quality TFT- LCD:
Process technology of manufacturing equipment is not completed by just to
plug machine in. If this is just only to set up machine, we cannot earn money on this
business. We must provide a process manufacturing conditions which we gave firm
commitment to customers. For example, we must maintain the stable rate, and cut the
glass to what extent. Whether Japanese or Taiwanese customers, they carry out
adjustment or coordination (tuning) with us to achieve their target specifications.
Otherwise, manufacturing equipment is worthless. Installing equipment was
completed, and process manufacturing conditions which we gave firm commitment to
customers are added piece by piece. Within the period specified by customers,
customers said “OK, no problem”, after acceptance inspection finished, payment of
our business is made. The large size manufacturing equipment will be priced from 10
billion to 15 billion yen. Micro fabrication process is required, manufacturing
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equipment must be equipped with precision parts. Certainly, manufacturing
equipment itself is very expensive, but, process technology is more important than
machine. In this process technology, there exists our ability and competitiveness.
Because our customers set a bar high for their quality level, we must meet their needs
as best we can. Quanta Display3had received long-term technical guidance of Sharp,
Japanese engineers in Sharp had been sent to Quanta Display to give technical
guidance on a long time-basis. At the beginning, there were a lot of problem in their
learning process, Taiwanese engineers were not able to operate manufacturing
equipment smoothly, but, finally, they successfully started up our machine. Because,
there are many excellent engineers in Taiwanese TFT-LCD manufacturers.
In
Taiwanese TFT-LCD manufacturers, if they master the operation of manufacturing
equipment, many engineers are able to form up impression of the process of TFTLCD manufacturing and construct the manufacturing step and proceeding. The rest
depends on their accumulation of experience. Taiwanese manufacturers spent a long
time to accumulate their experience and know-how and were able to create a distinct
image of TFT-LCD manufacturing. I stress the fact that just because Japanese
engineers provide guidance to TFT-LCD manufacturers, it doesn’t mean that they can
create a distinct image of TFT-LCD manufacturing process immediately. Chinese
TFT-LCD manufacturers have trouble with this in Mainland China now (MF-J3).
According to YAC cadres in Japan, when Sharp engaged in technology transfer
to Quanta Display, Taiwanese engineers paid a lot of effort in the process of
adjustment and coordination of Japanese technology. Considerable experience and
knowledge were needed in learning manufacturing technology, just because Japanese
3Major TFT-LCD manufacturer in Taiwan. In 2006, it was merged by AUO(the biggest TFT-LCD
manufacturer in Taiwan).
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companies provide technical guidance, it does not mean that Taiwanese TFT-LCD
manufactures are able to control manufacturing equipment immediately. If Taiwanese
TFT-LCD manufacturers are difficult to master Japanese process technology, even
they buy manufacturing equipment from Japanese firm, it is impossible for them to
learn core concept of TFT-LCD manufacturing technology. Due to the accumulation
of
experience,
coordination
and
adjustment
ability,
Taiwanese
TFT-LCD
manufactures successfully learned manufacturing technology. Having limited
experience, coordination and adjustment (tuning) ability, Chinese TFT-LCD
manufacturers are confronting serious problem in their leaning process of
manufacturing technology. Taiwanese firms’ coordination and adjustment (tuning)
ability with Japanese firms belong to “global social embeddeness” strategy,
Taiwanese firms are thought to be well versed in their ability to manage global
interactive coordination.
3.2 Global Social Embeddeness: Transformation from Inequality
Relationship to Interactive Relationship
Taiwanese TFT-LCD manufactures succeeded in learning and mastering
Japanese mass production technology. At the present moment, Taiwanese companies
are no longer requiring technical assistance of manufacturing technology from
Japanese counterparts. But this situation is just only on the condition of
manufacturing technology of TFT-LCD. Taiwanese manufactures still rely on
Japanese technology in the field of materials, parts and manufacturing equipment.
Taking the example of the manufacturing equipment, the level of technology of
Taiwanese related companies have remained at the low-end transportation facilities
and automation equipment. In terms of high-end technologies such as etching and
lithography manufacturing equipment, Taiwanese firms have to depend on Japanese
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counterparts. In that sense, the interrelation between Taiwan and Japan are not
competitive relationships, but inequality relationships.
However, it is noteworthy that due to the withdrawal of Japanese consumerelectronics giants from large size TFT-LCD global market, major customer of TFTLCD manufacturing equipment has shifted from Japan to Taiwan. In other words,
manufacturing equipment’s mainstream market has become Asia(Taiwan and Korea)
without Japan, in that sense, the position of Japanese manufacturing equipment
makers in the global market has become weaker than before (MF-J3). Japan YAC
company’s cadre commented the expansion of bargaining power of Taiwanese TFTLCD manufacturers:
Now, we are talking business relationships with Taiwanese customers, such as
TV set, smart phones, mobile device or touch panel manufacturers. If we’d like to sell
LCD manufacturing equipment to these Taiwanese customers, we are always asked by
them “Have you ever had business dealings with Samsung or LG? ". It just looks like
that we are tested by Taiwanese manufacturers. But, we are not asked by them
whether we have had business dealings with Sharp. Recently, Samsung and LG
LCDs’ manufacturing technology have become a mainstream technology in this
global
competitive
field.
So,
relationship
between
Taiwanese
TFT-LCD
manufacturers and Japanese LCD manufacturing equipment makers has been
changing drastically. Anyway, Korean manufacturers received much more attention
than Japanese counterparts(MF-J3).
According to the comment by YAC’s cadre, the product of Samsung
Electronics has become mainstream LCD TV in European and emerging markets.
Therefore, Japanese LCD equipment manufacturers are trying to do business with
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Taiwanese customers, they inevitably are asked by Taiwanese customers whether they
have had business relationships with Korean manufacturers or not. Whether or not of
this business experience with Korean manufacturers have become the important
conditions signing a contract. Taiwanese manufacturers do not care about whether
Japanese LCD equipment manufacturers have signed a contract with Japanese major
consumer electronics giants, for example Sharp.
A senior business manager in Canon (Japanese major electronics company, it’s
product portfolio includes TFT-LCD manufacturing equipment) pointed out, the rise
of South Korea and Taiwan TFT-LCD industry started from 2000, however, within
that time frame, Japanese consumer electronics giants were extremely conservative to
do large-scale investment on the TFT-LCD industry. Japanese LCD equipment
manufacturers which lost major customers in Japan began to develop new market in
Taiwan and South Korea to sell TFT-LCD manufacturing equipment to Taiwanese
and Korean TFT-LCD manufacturers:
In terms of the protection of Japanese technology, Japan’s leading businesses,
for example Japanese consumer electronics giants just like Sharp, NEC and Hitachi
(they are major TFT-LCD manufactures in Japan) should block leaks of their
corporate secrets. But, we are not this kind of vendor, just only standing at the
position to supply TFT-LCD manufacturing equipment to the varieties of customers in
the global TFT-LCD market. As long as customers meet certain benchmarks,
regardless of which countries in the world, we will sell our products to them. Any
countries, Taiwan, Korea or China, we will sell our TFT-LCD manufacturing
equipment to them. It would be a pleasure for us to accept their orders. I think that
Japanese equipment manufacturers could not receive orders from Japanese consumer
electronics giants, finally with no other choice, they started to sell their products to
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Taiwanese TFT-LCD manufactures around 2000(MF-J4).
According to the comment of business manager in Canon, when Sharp took the
initiative in promoting research and development of sixth-generation TFT-LCD
manufacturing technology in order to maintain technological advantages, Taiwanese
TFT-LCD manufacturers have started to set up the fifth-generation plant which was a
mainstream technology in global TFT-LCD market trend on that time. Taiwanese
TFT-LCD manufactures started to buy a large amount of fifth-generation lithography
equipment from Canon. Canon Business Manager said:
In terms of the list of customers, Asian customers (Taiwanese, Korean
customers and so on) have overwhelmingly surpassed Japanese customers. This is
because Japanese customers no longer to invest in TFT-LCD production capacity.
Global TFT-LCD market is under this kind of situation. Japanese customers focus on
the technology development of the extremely details in TFT-LCD’s internal structure.
Otherwise, Japanese consumer electronics giants are reluctant to make alarge scale
investment. In fact, I was working at Canon Marketing Japan Inc,and was taking care
of Japanese customers. Canon Marketing Japan just focused on customers in Japan.
However, later Japanese domestic market shrank drastically, Canon Marketing Japan
reduced redundant personnel, and I got laid off and transferred here (optical
equipment division in Canon head office). Due to a severe economic slump, in 1997,
Yamaichi Securities Company (one of the major financial institutions in Japan) went
into bankrupt, Japanese consumer electronics giants have lost their hospitable
investment climate in Japan. So, they abandoned their large-scale investment in TFTLCD industry. During this period, Korean and Taiwanese TFT-LCD manufacturers
desperately continued to make large-scale investment. But, as for Japanese consumer
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electronics giants, they once gave up their investment in TFT-LCD industry, it would
be really hard to go back and started to invest again(MF-J4).
Until the late 1990s, there have been frequent business dealings between
Japanese major consumer electronics(Sharp, etc.) and Japanese TFT-LCD equipment
manufacturers. Later, Japanese major consumer electronics withdrew from large-size
TFT-LCD market, in the past several years, major customers of Japanese TFT-LCD
equipment manufacturers are Taiwanese and Korean TFT-LCD manufactures.
Compared to Korean manufacturers, Taiwanese TFT-LCD equipment manufacturers
tend to be reluctant to promote high cost research and development, they buy more
production equipment from Japanese TFT-LCD equipment manufacturers than
Korean counterparts. Statistical data from Japanese government can track this trend of
transformation. In terms of domestic and external demand, in 1996, 78% of Japanese
TFT-LCD production equipment was sold in Japanese domestic market, just only 22%
was sold in foreign market. However, after 1999, the ratio of foreign markets started
to increase. In 2005, the ratio of domestic market reduced to only 19%, the ratio of
foreign markets grew to 81 percent, and demand trend of domestic and international
market became reversed. In terms of country of sale, in 2005, percentage of Japanese
TFT-LCD production equipment export to Taiwan reached 63 percent of the total
exports, the proportion of export volume to Korean market was 31%, and the
proportion of exports to Chinese market was 4%. The main export market
transformed from Japanese domestic market to other Asian market (METI statistical
report,38-39).
Certainly, Japanese manufacturing equipment makers have extremely ultraadvanced technology, however, from the “global market” point of view, the crossnational interrelation between Taiwanese firms and Japanese counterparts is
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“interdependence”, also I can say that is a collaboration relationship in the transborder technological development stage.
In the near future, the relations between Japanese high-tech industry and
Taiwanese TFT-LCD manufacturers will transform from “inequality relationship”
into “interdependence”, and eventually converge with “interactive relationship”.
Taiwanese executive officer in GPM (Taiwanese TFT-LCD manufacturing equipment
maker) commented:
Indeed, whatever the material or the manufacturing equipment, in either case,
technological level of Japanese manufacturers is extremely high. Taiwanese TFTLCD industry is excellent only in manufacturing process. However, due to the
slumping business, when Sharp or other Japanese consumer electronics giants reduce
investment in plant and equipment capital investment, Samsung, Taiwanese TFT-LCD
manufacturers such as AUO and CMO continue to make big amount of capital
investment. I heard that Sharp has signed a technology confidentiality agreement with
materials and manufacturing equipment manufacturers in Japan. But, realistically
speaking, Sharp reduce capital investment, of course, materials and manufacturing
equipment manufacturers in Japan will form a partnership with TFT-LCD
manufacturers in Taiwan. If so, even if Sharp controls the outflow of technology
information
to
Taiwanese
TFT-LCD
manufacturers,
Taiwanese
TFT-LCD
manufacturers by cooperation with manufacturers of materials and manufacturing
facilities in Japan should continue to develop more and more new products(MF-T1).
As high-tech companies in Taiwan and South Korea had a certain level of
technology, Japanese “technology-centric” strategy did not have competitive powers
such as to the past. In the field of materials and manufacturing equipment, the level of
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Taiwanese TFT-LCD industry’s technology is inferior to Japanese counterparts.
However, the manufacturing base of TFT-LCD that procures materials and
manufacturing equipment and material has been transferred to Taiwan and South
Korea from Japan, materials and manufacturing equipment suppliers in Japan are
forced to collaborate with TFT-LCD manufacturers in Taiwan, and try to develop a
new TFT-LCD product. That is, Taiwanese TFT-LCD manufacturers have already
move away from reliance on Japanese manufacturing equipment and materials
suppliers, they've come to the stage of developing a new TFT-LCD product, while
collaborating closely with Japanese manufacturing equipment and materials suppliers.
In that sense, the relationship between Taiwanese TFT-LCD industry and Japanese
companies, has reached a new stage of the “global social embeddeness” stage
characterized by an interactive relationship.
4. Conclusion　According to the analysis based on “global social embeddedness”, the
interrelation between Taiwanese TFT-LCD manufactures and Japanese firms
transformed
from
technology-dependent
power
relationships
(“inequality
relationships”) into global market-oriented “interdependence”. That is, Taiwanese
TFT-LCD manufactures took a chance from the escalated competitive relationships
between Japanese consumer-electronics giants and Korean counterparts, and
succeeded in introducing manufacturing technology from Japan. Taiwanese
manufacturing firms have started R&D activity of LCD technology since the 1970s,
through the accumulated experience and know-how on a long-term basis, after the
introduction of Japanese mass production technology, learned and mastered core
technology within a short period of time. Moreover, they have been making a big
effort of introducing Japanese senior engineers and consultants from Japan in parallel
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(“social embeddedness” strategy).
Japanese consumer electronics giants such as Sharp adopted technology
blockade policy (black-box strategy) and tried to prevent the outflow of technology to
Taiwanese manufacturers since 2004, however, at that time, Taiwanese companies
already learned and mastered all of the core manufacturing technologies in Japan.
Japan's “technology-centric” perspective too much emphasized on technology-centric
argument, neglected the effect of “social embeddedness” in Taiwanese TFT-LCD
industry, and did not understand the main reason of failure in Japan’s technology
blockage policy (black-box strategy).
As I saw in the previous chapter, Taiwanese TFT-LCD manufacturers firms’
have a strong ability to coordinate and adjust (tuning) Japanese technology and
relationship with Japanese firms in the cross-national setting. This competitive
strength, I call it“ global social embeddeness” strategy, Taiwanese firms are thought
to be well versed in their coordination to manage cross-national interactive
coordination, especially react flexibly according to changes in the global market. In
fact, Taiwanese TFT-LCD manufacturers have become no longer learning technology
from Japanese firms anymore. However, in terms of materials and TFT-LCD
manufacturing equipment, Taiwanese firms still rely on the technology of Japanese
counterparts (“inequality relationship”). Nonetheless, even this kind of technology
dependencies is likely to change in the global industrial field that mainstream
manufacturing base of TFT-LCD industry moved from Japan to Taiwan. Japanese
consumer electronics giants walked away from large size TFT-LCD manufacturing
business that is no longer profitable, Japanese materials and manufacturing equipment
makers are forced to construct a collaboration relationship with Taiwanese TFT-LCD
manufacturers
(“interdependence”).
Furthermore,
Taiwanese
TFT-LCD
manufacturers started to develop and produce new TFT-LCD products with Japanese
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materials and manufacturing equipment makers in the cross-national technological
development stage(“interactive relationship”).
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